Fortnightly - Dayton Power and Lighthttp://www.fortnightly.com/tags/dayton-power-and-light
enPeople (September 2013)http://www.fortnightly.com/fortnightly/2013/09/people-september-2013
<div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - September 2013</div></div></div><div class="field field-name-field-import-image field-type-image field-label-above"><div class="field-label">Image:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/PEO-Al-Leverret.jpg" width="800" height="1200" alt="Allen L. Leverett" title="Allen L. Leverett" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/PEO-Steve-King.jpg" width="894" height="1200" alt="Steven V. King" title="Steven V. King" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/PEO-Gary-Stephenson.jpg" width="808" height="1066" alt="Gary Stephenson" title="Gary Stephenson" /></div><div class="field-item odd"><img src="http://www.fortnightly.com/sites/default/files/PEO-Larry-Borgard.jpg" width="805" height="1072" alt="Lawrence T. Borgard" title="Lawrence T. Borgard" /></div><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/PEO-Sheila-Talton.jpg" width="544" height="747" alt="Sheila G. Talton" title="Sheila G. Talton" /></div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><span class="boldred">New Opportunities:</span><b>Southern Company </b>made several changes within the company’s operations management team: <b>William C. Grantham</b> was named v.p., CFO and treasurer for subsidiary Southern Power. He succeeds <b>Michael W. Southern</b>, who will retire. <b>John G. Trawick </b>succeeds Grantham in the newly expanded role of v.p. of commercial operations and services. Trawick most recently served as Tennessee Valley Authority’s senior v.p. of power supply and fuels. In addition, <b>Kimberly D. Flowers </b>was named v.p. of engineering for engineering and construction services. <b>Lewis A. Jeffers</b> will succeed Flowers as v.p. of technical services for engineering and construction.</p>
<p><b>Wisconsin Energy</b> named <b>Allen L. Leverett</b> president. Leverett previously served as an executive v.p. of Wisconsin Energy and head of the company’s power generation group. He will succeed <b>Gale E. Klappa</b>, who will continue as chairman and CEO.</p>
<p><b>AES</b> named <b>Derek Porter</b> president of <b>DPL</b> and <b>Dayton Power and Light</b> (DP&amp;L). Most recently Porter served as country manager in Panama where he led the country’s largest electricity generator operating five hydroelectric plants. <b>Phil Herrington</b> will remain CEO of DPL and DP&amp;L. Previously, Herrington was president of global wind generation for AES.</p>
<p><b>OGE Energy</b><b> </b>named <b>Sean Trauschke</b> president of the company’s Oklahoma Gas &amp; Electric subsidiary. Trauschke will continue to serve as CFO of both OGE Energy and OG&amp;E. Trauschke joined OGE Energy in 2009 as v.p. and CFO. </p>
<p><b>New York Independent System Operator</b> (NYISO) named <b>Cheryl Hussey </b>v.p. and CFO. Hussey, who has been with the NYISO since 2008, was promoted to the position from her role as controller and assistant treasurer. </p>
<p>The <b>Western Electricity Coordinating Council</b> (WECC) appointed <b>Gary Stephenson</b> as CEO designate of the planned spinoff entity currently referred to as the Reliability Coordination Co. (RCCo). Stephenson is expected to become president and CEO of the RCCo., once all necessary regulatory approvals have been achieved. Most recently Stephenson was executive v.p. of operations at DPL.</p>
<p>The <b>Washington Utilities and Transportation Commission</b> (UTC) named <b>Steven V. King</b> as its new executive director and secretary. He has been acting in that role since February. Most recently, King served as the UTC’s director of safety and consumer protection.</p>
<p><span class="boldred">Associations:</span> The <b>Smart Grid Interoperability Panel</b> (SGIP) appointed new directors, they are: <b>Dave Hardin</b>, senior director of smart grid standards at EnerNOC; <b>Tom Herbst</b>, director at Silver Spring Networks; <b>Suresh Kotha</b>, chief enterprise architect and information technology manager of Sacramento Municipal Utility District (SMUD); <b>Doug McGinnis</b>, senior manager of network services at Exelon; and <b>Steve Widergren</b>, principal engineer at Pacific Northwest National Lab. </p>
<p><span class="boldred">Boards of Directors: </span><b>Lawrence T. Borgard </b>joined the <b>American Transmission Co.</b><b> </b>(ATC) board of directors. Borgard is the current president and COO of utilities for Integrys Energy Group. </p>
<p><b>First Solar</b> appointed <b>Sharon Allen</b> to its board of directors. Allen served as U.S. chairman of Deloitte LLP from 2003 to 2011, retiring from that position in May of 2011. Allen currently serves as an independent director of Bank of America Corp.</p>
<p><b>OGE Energy</b> appointed <b>Sheila G. Talton</b> to the company’s board of directors. Talton currently serves as president and CEO of Gray Matter Analytics.</p>
<p><b>Just Energy Group</b> elected <b>Brett Perlman </b>to its board. Perlman is currently president of Vector Advisors and served as commissioner of the Public Utility Commission of Texas from 1999 to 2003.</p>
<p><i>We welcome submissions to </i>People<i>, especially those accompanied by a high-resolution color photograph. E-mail to: <a href="mailto:people@pur.com">people@pur.com</a>.</i></p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/people">People</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/people">People</a></li></ul></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/southern-company">Southern Company</a><span class="pur_comma">, </span><a href="/tags/william-c-grantham">William C. Grantham</a><span class="pur_comma">, </span><a href="/tags/michael-w-southern">Michael W. Southern</a><span class="pur_comma">, </span><a href="/tags/john-g-trawick">John G. Trawick</a><span class="pur_comma">, </span><a href="/tags/kimberly-d-flowers">Kimberly D. Flowers</a><span class="pur_comma">, </span><a href="/tags/lewis-jeffers">Lewis A. Jeffers</a><span class="pur_comma">, </span><a href="/tags/wisconsin-energy">Wisconsin Energy</a><span class="pur_comma">, </span><a href="/tags/allen-l-leverett">Allen L. Leverett</a><span class="pur_comma">, </span><a href="/tags/gale-e-klappa">Gale E. Klappa</a><span class="pur_comma">, </span><a href="/tags/aes">AES</a><span class="pur_comma">, </span><a href="/tags/derek-porter">Derek Porter</a><span class="pur_comma">, </span><a href="/tags/dpl">DPL</a><span class="pur_comma">, </span><a href="/tags/dayton-power-and-light">Dayton Power and Light</a><span class="pur_comma">, </span><a href="/tags/phil-herrington">Phil Herrington</a><span class="pur_comma">, </span><a href="/tags/oge-energy">OGE Energy</a><span class="pur_comma">, </span><a href="/tags/sean-trauschke">Sean Trauschke</a><span class="pur_comma">, </span><a href="/tags/new-york-independent-system-operator">New York Independent System Operator</a><span class="pur_comma">, </span><a href="/tags/nyiso">NYISO</a><span class="pur_comma">, </span><a href="/tags/cheryl-hussey">Cheryl Hussey</a><span class="pur_comma">, </span><a href="/tags/western-electricity-coordinating-council">Western Electricity Coordinating Council</a><span class="pur_comma">, </span><a href="/tags/wecc">WECC</a><span class="pur_comma">, </span><a href="/tags/gary-stephenson">Gary Stephenson</a><span class="pur_comma">, </span><a href="/tags/washington-utilities-and-transportation-commission">Washington Utilities and Transportation Commission</a><span class="pur_comma">, </span><a href="/tags/steven-v-king">Steven V. King</a><span class="pur_comma">, </span><a href="/tags/smart-grid-interoperability-panel">Smart Grid Interoperability Panel</a><span class="pur_comma">, </span><a href="/tags/sgip">SGIP</a><span class="pur_comma">, </span><a href="/tags/dave-hardin">Dave Hardin</a><span class="pur_comma">, </span><a href="/tags/tom-herbst">Tom Herbst</a><span class="pur_comma">, </span><a href="/tags/suresh-kotha">Suresh Kotha</a><span class="pur_comma">, </span><a href="/tags/doug-mcginnis">Doug McGinnis</a><span class="pur_comma">, </span><a href="/tags/steve-widergren">Steve Widergren</a><span class="pur_comma">, </span><a href="/tags/lawrence-t-borgard">Lawrence T. Borgard</a><span class="pur_comma">, </span><a href="/tags/american-transmission">American Transmission</a><span class="pur_comma">, </span><a href="/tags/first-solar">First Solar</a><span class="pur_comma">, </span><a href="/tags/sharon-allen">Sharon Allen</a><span class="pur_comma">, </span><a href="/tags/sheila-g-talton">Sheila G. Talton</a><span class="pur_comma">, </span><a href="/tags/just-energy-group">Just Energy Group</a><span class="pur_comma">, </span><a href="/tags/brett-perlman">Brett Perlman</a> </div>
</div>
Sun, 01 Sep 2013 19:47:36 +0000meacott16747 at http://www.fortnightly.comPeople (January 2009)http://www.fortnightly.com/fortnightly/2009/01/people-january-2009
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">People</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - January 2009</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><span class="boldred">New Opportunities: </span><b>El Paso Electric (EPE)</b> selected <b>David W. Stevens</b> as CEO, succeeding <b>J. Frank Bates</b>, who served as interim president and CEO. Stevens was president and CEO of Cascade Natural Gas Corp. and Bates remains at EPE as president and COO.</p>
<p><b>DPL Inc.</b> promoted <b>Frederick J. Boyle</b> to senior vice president, CFO and treasurer of DPL and its principal subsidiary, The Dayton Power and Light Co. He replaces <b>John J. Gillen</b> who accepted a position with a private firm.</p>
<p><b>Great Plains Energy</b> named <b>Todd Kobayashi</b> v.p., strategy and risk management.</p>
<p><b>Consumers Energy</b> promoted <b>Richard J. Ford </b>to vice president of energy delivery, succeeding retired <b>Paul N. Preketes</b>.</p>
<p><b>Black Hills Corp.</b> promoted <b>Jeff Berzina</b> to vice president of finance, prompted by the acquisition of Aquila.</p>
<p><b>Northeast Utilities </b>named <b>James A. Muntz</b> president, transmission from senior v.p., transmission.</p>
<p><b>Dynegy</b> named <b>Charles C. Cook</b> executive vice president, commercial and market analytics from senior v.p. strategic planning, corporate business development and treasurer. <b>Mario E. Alonso</b> is v.p., strategic planning and corporate business development from managing director, strategic planning and corporate business development.</p>
<p><b>Duke Energy</b> announced eight leadership changes. <b>Ellen T. Ruff </b>is president, office of nuclear development from president of Duke Energy Carolinas. <b>Sandra P. Myer</b> is senior vice president of power delivery for U.S. franchised electric and gas (FE&amp;G) from president, Duke Energy Ohio and Duke Energy Kentucky. <b>Brett C. Carter</b> is president of Duke Energy Carolinas from senior v.p. of customer service and business development. <b>Julie S. Janson</b> is president, Duke Energy Ohio and Duke Energy Kentucky from senior v.p. of ethics and compliance and corporate secretary. <b>Gianna M. Manes</b> is senior v.p., retail customer services, FE&amp;G from senior v.p. of regulated portfolio optimization and fuels. <b>Paul R. Newton</b> is senior v.p., wholesale customers and regulated commodity management, FE&amp;G from senior v.p., legal, FE&amp;G. <b>Catherine S. Stempien</b> is senior v.p., legal FG&amp;E from senior v.p., corporate legal services. <b>Jeffery G. Browning</b> is v.p. of audit services and chief ethics and compliance officer from v.p., audit services.</p>
<p><b>Constellation Energy</b> named <b>Kathleen W. Hyle</b> COO of overall commercial business. She will lead the new management team from the announced merger with MidAmerican Energy Holdings Co. The announcement coincided with the resignations of <b>Thomas V. Brooks</b>, president of Constellation Energy Resources and executive vice president, Constellation Energy, and <b>George E. Persky</b>, senior v.p., Constellation Energy and chief commercial officer for Constellation Energy Resources.</p>
<p><b>Ameren</b> named <b>Mark E. Blair</b> manager of insurance risk management and president of Ameren’s captive insurance company, Energy Risk Assurance.</p>
<p><b>The American Wind Energy Association</b> appointed <b>Denise Bode</b> as CEO, succeeding the retiring <b>Randall S. Swisher</b>.</p>
<p><b>The Electric Power Supply Association</b> (EPSA) elected new officers. <b>Bruce L. Levy</b>, president of International Power America, Inc. is re-elected chairman. <b>Clarence (Joe) Hopf, Jr.</b>, president of PSEG Energy Resources &amp; Trade, is EPSA’s first vice chairman. <b>Jack A. Fusco</b>, president and CEO of Calpine is EPSA’s second vice chairman. <b>Robert M. Edgell</b>, executive vice president and COO of Mirant is EPSA’s secretary. <b>Zin Smati</b>, president and CEO of GDF Suez Energy North America, will remain as treasurer.</p>
<p> </p>
<p><span class="boldred">Boards of Directors: </span> <b>Nicor Inc.</b> elected <b>Armando J. Olivera</b> to its board. He is president and CEO of Florida Power &amp; Light.</p>
<p><b>The Greater Missouri Leadership Foundation</b> elected <b>Carole M. Hunt </b>to its board. She is assistant treasurer and manager of business services at Ameren Corp.</p>
<p> </p>
<p><i>We welcome submissions to People, especially those accompanied by a high-resolution color photograph. E-mail to: <a href="mailto:people@pur.com">people@pur.com</a>.</i></p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/people">People</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/people">People</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/0901/images/0901-cvr.jpg" width="1121" height="1500" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
<a href="/tags/ameren">Ameren</a><span class="pur_comma">, </span><a href="/tags/american-wind-energy-association">American Wind Energy Association</a><span class="pur_comma">, </span><a href="/tags/armando-j-olivera">Armando J. Olivera</a><span class="pur_comma">, </span><a href="/tags/black-hills-corp">Black Hills Corp</a><span class="pur_comma">, </span><a href="/tags/black-hills-corp-0">Black Hills Corp.</a><span class="pur_comma">, </span><a href="/tags/calpine">Calpine</a><span class="pur_comma">, </span><a href="/tags/constellat">Constellat</a><span class="pur_comma">, </span><a href="/tags/constellation">Constellation</a><span class="pur_comma">, </span><a href="/tags/constellation-energy">Constellation Energy</a><span class="pur_comma">, </span><a href="/tags/consumers-energy">Consumers Energy</a><span class="pur_comma">, </span><a href="/tags/david-w-stevens">David W. Stevens</a><span class="pur_comma">, </span><a href="/tags/dayton-power-and-light">Dayton Power and Light</a><span class="pur_comma">, </span><a href="/tags/dpl">DPL</a><span class="pur_comma">, </span><a href="/tags/dpl-inc">DPL Inc.</a><span class="pur_comma">, </span><a href="/tags/duke-energy">Duke Energy</a><span class="pur_comma">, </span><a href="/tags/duke-energy-carolinas">Duke Energy Carolinas</a><span class="pur_comma">, </span><a href="/tags/dynegy">Dynegy</a><span class="pur_comma">, </span><a href="/tags/el-paso-electric">El Paso Electric</a><span class="pur_comma">, </span><a href="/tags/epe">EPE</a><span class="pur_comma">, </span><a href="/tags/epsa">EPSA</a><span class="pur_comma">, </span><a href="/tags/ford">Ford</a><span class="pur_comma">, </span><a href="/tags/great-plains-energy">Great Plains Energy</a><span class="pur_comma">, </span><a href="/tags/james-muntz">James A. Muntz</a><span class="pur_comma">, </span><a href="/tags/leadership">Leadership</a><span class="pur_comma">, </span><a href="/tags/midamerican">MidAmerican</a><span class="pur_comma">, </span><a href="/tags/midamerican-energy">MidAmerican Energy</a><span class="pur_comma">, </span><a href="/tags/midamerican-energy-holdings">MidAmerican Energy Holdings</a><span class="pur_comma">, </span><a href="/tags/nicor">Nicor</a><span class="pur_comma">, </span><a href="/tags/northeast-utilities">Northeast Utilities</a><span class="pur_comma">, </span><a href="/tags/wind">Wind</a> </div>
</div>
Thu, 01 Jan 2009 05:00:00 +0000puradmin13747 at http://www.fortnightly.comPeoplehttp://www.fortnightly.com/fortnightly/2007/10/people
<div class="field field-name-field-import-category field-type-text field-label-inline clearfix"><div class="field-label">Category:&nbsp;</div><div class="field-items"><div class="field-item even">People</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - October 2007</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p><span class="boldred">New Opportunities: </span><b>Sempra Energy</b> said <b>J. William Ichord</b> joined the company as vice president of government relations. He will direct local, state, and federal governmental affairs. Previously, Ichord was managing director of global affairs and international counsel of the American Chemistry Council.</p>
<p><b>DPL Inc.</b> appointed <b>Frank F. Gallaher </b>to the boards of directors of DPL and The Dayton Power and Light Co. Gallaher’s career spanned more than 30 years with Entergy Corp. Since retiring from Entergy in 2003, Mr. Gallaher has been consulting with a variety of clients throughout the electric utility industry.</p>
<p>The board of directors of <b>NiSource Inc.</b> elected <b>Deborah S. Coleman</b>, executive vice president and COO of the National Urban League, to the NiSource board of directors. Before joining the National Urban League, Coleman spent more than 20 years with Ford Motor Co. in various corporate positions. She will serve on the following committees: Environmental Health &amp; Safety; Corporate Governance; and Nomination &amp; Compensation.</p>
<p>The <b>National Association of Regulatory Utility Commissioners</b> (NARUC) tapped former NARUC President <b>Jim Sullivan</b> as the new chairman of the association’s Critical Infrastructure Committee. Sullivan, president of the Alabama Public Service Commission, replaces former Chairman <b>Sandra Hochstetter </b>of Arkansas, who left earlier this summer. Developed on an ad-hoc basis after the Sept. 11, 2001, terrorist attacks, the Critical Infrastructure Committee gives state regulators a forum to identify, study, and propose solutions to utility infrastructure security and delivery concerns, with a particular focus on facilities necessary to produce, transmit, and deliver natural gas, electricity, water, and telecommunications services.</p>
<p><b>FirstEnergy Corp.</b> announced that <b>Richard J. Horak</b>, previously director, Integrated Business Planning, has been named to the position of assistant controller. <b>John W. Judge</b> was named director, Integrated Business Planning for FirstEnergy. Judge previously was director of Commodity Supply Planning for FirstEnergy Solutions, FirstEnergy’s competitive subsidiary. The changes were effective Sept. 2, 2007. Horak joined the company in 1973 and was named to his most recent position in 2004. Judge joined FirstEnergy in 1998 and was named to his most recent position in 2004.</p>
<p> </p>
<p><span class="boldred">Awarded:</span> The <b>Florida Municipal Electric Association</b> (FMEA) named Spiegel &amp; McDiarmid partner <b>Cynthia Bogorad</b> as its associate member of the year. FMEA described Cindy as a “person of great intellect; someone who is able to wrap their mind around the most complex of issues and break them into understandable and digestible pieces … a devoted and trusted counselor.”</p>
<p> </p>
<p><span class="boldred">Retired:</span><b>Pepco Holdings Inc.</b> said <b>Tom Shaw</b>, executive vice president and COO, retired on Sept. 1, 2007, after 36 years of service. <b>Joseph M. Rigby</b>, senior vice president and CFO of PHI, replaced Shaw as executive vice president and COO effective Sept.1. <b>Paul H. Barry</b>, formerly senior vice president and chief development officer of Duke Energy, replaced Rigby as senior vice president and CFO.</p>
<p> </p>
<p><span class="boldred">Deceased:</span><b>Edward McGaffigan Jr.</b>, the longest serving member of the U.S. Nuclear Regulatory Commission (NRC), died after a long battle with melanoma. He was 58. He was appointed to the commission by President Clinton in 1996 and 2000, and by President Bush in 2005. On Nov. 3, 2006, he became the panel’s longest serving member.</p>
</div></div></div><div class="field field-name-field-article-category field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Category (Actual): </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/article-categories/people">People</a></li></ul></div><div class="field field-name-field-members-only field-type-list-boolean field-label-above"><div class="field-label">Viewable to All?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-article-featured field-type-list-boolean field-label-above"><div class="field-label">Is Featured?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-department field-type-taxonomy-term-reference field-label-above clearfix"><h3 class="field-label">Department: </h3><ul class="links"><li class="taxonomy-term-reference-0"><a href="/department/people">People</a></li></ul></div><div class="field field-name-field-image-picture field-type-image field-label-above"><div class="field-label">Image Picture:&nbsp;</div><div class="field-items"><div class="field-item even"><img src="http://www.fortnightly.com/sites/default/files/article_images/0710/images/0710-cvr.jpg" width="1121" height="1500" alt="" /></div></div></div><div class="field field-name-field-fortnightly-40 field-type-list-boolean field-label-above"><div class="field-label">Is Fortnightly 40?:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-law-lawyers field-type-list-boolean field-label-above"><div class="field-label">Is Law &amp; Lawyers:&nbsp;</div><div class="field-items"><div class="field-item even"></div></div></div><div class="field field-name-field-tags field-type-taxonomy-term-reference field-label-above clearfix">
<div class="field-label">Tags:&nbsp;</div>
<div class="field-items">
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Mon, 01 Oct 2007 04:00:00 +0000puradmin13894 at http://www.fortnightly.comCommission Watchhttp://www.fortnightly.com/fortnightly/2003/11/commission-watch
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Irregular seams affect ratemaking policies.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Lori A. Burkhart</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - November 1 2003</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 class="dept">Commission Watch</h1>
<h3>Irregular seams affect ratemaking policies.</h3>
<p></p>
<p>In a case that marks the first time the Federal Energy Regulatory Commission eliminated inter-RTO rate pancaking, the commission in late July issued an order terminating regional through-and-out rates (RTORs) charged by two regional transmission owners (RTOs)-Midwest Independent System Operator (MISO) and PJM Interconnection. The decision removes an estimated $250 million in yearly fees collected by those two entities.</p>
<p>But the lost revenue has parties to the proceeding squabbling over many aspects of the case, such as how to make up for the lost money, and whether new revenue recovery mechanisms should be litigated as compliance filings or in new, separate proceedings. Also up for debate: how to make calculations within the new cost-recovery mechanisms that eventually will be adopted.</p>
<p>The flurry of filings resulted from FERC's finding that the RTORs in the MISO and PJM regions perpetuate seams and rate pancaking, preventing realization of more efficient and competitive electric markets when applied to transactions sinking within the proposed MISO ISO/PJM footprint. FERC eliminated them Nov. 1, 2003.</p>
<p>The commission, which created the RTORs to provide revenues when rate pancaking is eliminated (see sidebar, "A History of RTOR"), said it was due to proposed RTO configurations that it finds the MISO and PJM RTORs unjust and unreasonable. FERC has been vexed by the geographically counterintuitive choices being made by utilities in joining either PJM or MISO. For example, Illinois Power, American Electric Power (AEP) and Commonwealth Edison Co. fit better with MISO, yet they intend to join PJM (see sidebar, "A PJM/MISO Primer"). FERC has called such choices "problematic," and it has noted that the resulting configuration could frustrate the goal of RTO formation. FERC said the decision by Illinois Power and the new PJM companies to join PJM results in a "long and irregular RTO border," perpetuates MISO's configuration problems and "would divide a highly interconnected portion of the grid, leaving in place an elongated and irregular seam across which significant trading activity takes place."</p>
<p>In the July 23 order, FERC reversed an initial decision by law judge Hebert Grossman finding that he lacked authority to eliminate the RTORs, and that should the new PJM companies join PJM, no new and irrational seams would be created. (American Electric Power, Commonwealth Edison, and DPL's Dayton Power and Light are the so-called "new PJM companies" that want to join PJM, but Dominion's Virginia Power also intends to join.) Re MISO and PJM Interconnection et al., </p>
<p>FERC pointed to the former Alliance Companies, which were thwarted in attempts to build their own RTO, noting that accepting the former Alliance Companies' RTO choices unconditionally would result in fewer benefits from one-stop shopping or the elimination of rate pancaking than if, for example, AEP joined MISO. By joining PJM, the Alliance Companies will exacerbate rate pancaking across the proposed seam for transactions within the RTOs, FERC said. It added that rate pancaking across the proposed seam is incorrectly characterized as "inter-RTO" rate pancaking, but it instead constitutes "intra-RTO" rate pancaking, which is prohibited under Order 2000. The solution, FERC concludes, is to eliminate RTORs, which are the through-and-out rates that constitute the rate pancaking and "in a very real sense constitute the seam."</p>
<p>Still, FERC lamented that even with elimination of the MISO and PJM RTORs, "in the near-term the region still will be riddled with seams," with the through-and-out rates under the individual-company tariffs "acting as toll gates that impede the realization of more efficient and competitive electricity markets in the region and that preserve a competitive advantage for the non-RTO participants' merchant functions." FERC specifically pointed to AEP, Ameren Services Companies on behalf of affiliates, Union Electric Co. and Central Illinois Public Service Co., ComEd, First Energy Corp., Illinois Power, Northern Indiana Public Service Co., and DP&amp;L. "We find that the through-and-out rates under the tariffs of these individual former Alliance Companies, for transactions sinking in the proposed MISO/PJM footprint, may be unjust," FERC said. It initiated a separate investigation into their RTORs in and . They believe that because the tariffs of all transmission providers within the proposed PJM-MISO footprint are the subject of Federal Power Act (FPA) Section 206 investigations in those two dockets, it would be administratively efficient to permit filings to support lost revenue recovery and to propose transition rate mechanisms (and actual rates) to be presented as filings for review in Phase II proceedings in these dockets.</p>
<p>The new PJM companies argue that FERC has not found the RTORs to be unjust and unreasonable per se, because it is leaving them in place as just and reasonable rates applicable to transactions outside the PJM/MISO footprint. But they further argue that if the investigation of individual RTORs in results in a finding that application of those rates within the proposed PJM/MISO footprint is unreasonable, it would be appropriate to consider transition rate design issues in phase II of that proceeding.</p>
<p>Meanwhile, GridAmerica had two out of three members begin operations under MISO on Oct. 1, 2003. Grid-America LLC is a for-profit independent transmission company, and its transmission facilities are owned by GridAmerica Co. members, including American Transmission System Inc., a FirstEnergy Corp. subsidiary; and NIPSCO, a NiSource subsidiary. Pending Missouri and Indiana state regulatory approval, it also includes Ameren.</p>
<p>GridAmerica disagrees with the new PJM companies. The company wants FERC to clarify that parties seeking to increase rates or file transitional rate mechanisms must do so through fresh section 205 rate filings, and not as phase II compliance filings in Ameren argues, "It is not clear how interested parties would be permitted to comment on any SECA-type mechanisms proposed by a transmission owner if that proposal is submitted on compliance."</p>
<p>But parties also are fighting over how to eliminate RTORs and the method of calculation of the new cost recovery mechanism to replace the RTORs.</p>
<p>GridAmerica asked FERC to require that both MISO and PJM RTORs should continue to apply to any transaction involving a company located in the MISO/PJM Super Region that has not eliminated its individual through-and-out rate, and to conditionally accept MISO's filing. It also wants FERC to reject PJM's proposal to eliminate its RTOR for all of the former Alliance Companies, regardless of whether those companies have eliminated individual through-and-out rates. Finally, it asked FERC to condition the elimination of MISO and PJM RTORs on the adoption of a lost revenue recovery mechanism, such as SECA.</p>
<hr />
<h3>A History of RTORs</h3>
<p>When FERC initially approved MISO's fixed-rate surcharge for through-and-out transmission service (RTOR), it was designed to recover revenue losses otherwise incurred by transmission owners after elimination of rate pancaking. The original RTOR was pegged at $0.78 per kW-month and was to apply during a six-year transition period. It was added on top of existing license-plate zonal rates imposed across the region. MISO allocated 50 percent of RTOR revenues to transmission owners based on relative share of the would-be lost revenues. The other 50 percent was spread out based on relative power flows carried by transmission owner member systems to provide through-and-out service. . -L.B.</p>
<hr />
<h3>A PJM/MISO Primer</h3>
<p>The proposed MISO/PJM Super Region is the footprint made up of the service territories that will comprise MISO, including NIPSCO, Ameren, and First Energy, which comprise the GridAmerica Cos., and PJM, including the former Alliance companies that have announced plans to join PJM. The former Alliance companies unsuccessfully attempted to form the Alliance RTO. These include: Ameren, American Electric Power Co., Commonwealth Edison Co., Dayton Power and Light Co., FirstEnergy, Illinois Power Co., and Northern Indiana Public Service Co. Two other former Alliance companies, Detroit Edison Co. and Consumers Energy Co., previously left Alliance and joined MISO.-L.B.</p>
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<a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/ameren">Ameren</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/american-transmission">American Transmission</a><span class="pur_comma">, </span><a href="/tags/comed">ComEd</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/consumers-energy">Consumers Energy</a><span class="pur_comma">, </span><a href="/tags/dayton-power-and-light">Dayton Power and Light</a><span class="pur_comma">, </span><a href="/tags/detroit-edison">Detroit Edison</a><span class="pur_comma">, </span><a href="/tags/dominion">Dominion</a><span class="pur_comma">, </span><a href="/tags/dpl">DPL</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/federal-power-act">Federal Power Act</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/first-energy">First Energy</a><span class="pur_comma">, </span><a href="/tags/firstenergy">FirstEnergy</a><span class="pur_comma">, </span><a href="/tags/firstenergy-corp">FirstEnergy Corp.</a><span class="pur_comma">, </span><a href="/tags/fpa">FPA</a><span class="pur_comma">, </span><a href="/tags/interconnection">Interconnection</a><span class="pur_comma">, </span><a href="/tags/iso">ISO</a><span class="pur_comma">, </span><a href="/tags/miso">MISO</a><span class="pur_comma">, </span><a href="/tags/nisource">NiSource</a><span class="pur_comma">, </span><a href="/tags/pjm">PJM</a><span class="pur_comma">, </span><a href="/tags/pjm-interconnection">PJM Interconnection</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a><span class="pur_comma">, </span><a href="/tags/transmission">Transmission</a> </div>
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Sat, 01 Nov 2003 05:00:00 +0000puradmin11332 at http://www.fortnightly.comCommission Watchhttp://www.fortnightly.com/fortnightly/2003/07-1/commission-watch-0
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Is the &quot;pathway concept&quot; the answer to Virginia&#039;s qualms?</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Lori A. Burkhart</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - July 1 2003</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><p></p>
<h3>Is the "pathway concept" the answer to Virginia's qualms?</h3>
<p>PJM, at its annual meeting, announced a plan to integrate ComEd into PJM by Oct. 1, pursuant to FERC's April 1 order, despite Virginia's saying no to membership by American Electric Power (AEP) or any other jurisdictional utility, according to PJM spokesman Ray Dotter. PJM introduced the "pathway concept" as a way to work around that state while the jurisdictional issues are being fought at FERC. (May 16 was the deadline for filings at FERC on whether the integration can proceed.)</p>
<p>If AEP does not become a PJM member, Exelon, ComEd's parent, and other market participants would use firm transmission capacity that they have purchased from AEP to link PJM and ComEd. "So folks who are not using their firm transmission capacity can contribute that to an aggregation that would function as sort of a virtual transmission line" Dotter explained.</p>
<p>He added that it is not a single line, but the combination of capacities over whatever lines are between ComEd and PJM, and that pathway would be operated and managed by PJM as a dynamic transmission line. The line would be subject to the same constraints as an actual transmission line.</p>
<p>It will be a two-way link so that power can flow in both directions.</p>
<p>So far, a few hundred megawatts are available from ComEd and Exelon, but PJM believes others might also contribute. For example, if a plant goes down for maintenance, that capacity for a month's down time could be used.</p>
<p>Financially, Dotter compared the situation to subletting office space. "Think of a firm transmission right as leasing transmission capacity, and when it is not needed participants would in a sense sublet it through PJM to others to flow power back and forth," he explained. PJM is in the midst of developing a stakeholder plan and business rules for how it would work. The Market Implementation Working Group is discussing how the pathway might operate, and details are being worked out. July 15 is the target date for a FERC filing on how the integration would work, including the pathway.</p>
<p>Meanwhile, AEP spokesman David M. Hagelin says AEP is moving ahead with the state approval process and is "not waiting per se." He added that the decision to delay joining PJM was made for AEP, not by AEP. "We will comply with Virginia law," he says. Hagelin says AEP considers FERC's April 1 order a "green light" to join PJM, rather than a mandate to do so. Hagelin noted that AEP's intention still is to join PJM (for its ECAR assets), "but it is clear that the timeline will be later than we had projected."</p>
<h3>Virginia-FERC SMD Dust Up: How PJM Got Caught in the Mix</h3>
<p>The trouble for PJM started after it had an agreement in place for AEP and ComEd to join the RTO. Virginia, leery of competitive efforts, decided it was time to slow down. Back in March, the Virginia Corporation Commission first said it was moving forward with AEP's request to transfer control of its transmission facilities to PJM, but the commission asked for supplemental information and said it wanted to consider the application after FERC's proposed standard market design (SMD) was finalized. (This happened before the future of SMD was cast into doubt. See )</p>
<p>The state commission expressed fears over reliability, and it directed AEP to provide a cost-benefit study showing results of joining the RTO from the perspective of the parent company, the Virginia company, other AEP corporate entities, shareholders, customers, and Virginia ratepayers as a whole .</p>
<p>But the Virginia legislature got involved early in April, passing House Bill 2453, which delayed the date by which incumbent electric utilities with transmission must join a regional transmission entity (RTE). It pre-empted the state's restructuring law, which required utilities to join an RTE by Jan. 1, 2001. Now, utilities such as AEP and Dominion Virginia Power are not allowed to join an RTE prior to July 1, 2004, and may only transfer management and control of transmission assets to the RTE by Jan. 1, 2005, subject to state commission approval. </p>
<p>Prior to giving permission, the state commission must find that approval will: (1) ensure that consumers' needs for economic and reliable transmission are met; and (2) meet the transmission needs of electric generation suppliers that do not own, operate, control, or have an entitlement to transmission capacity.</p>
<p>The problem is that AEP, one of the largest investor-owned electric holding companies in the United States, operates in 11 states and would provide the link for PJM to expand its footprint and reach ComEd in Illinois through Virginia, Kentucky, Indiana, West Virginia, and Ohio.</p>
<h3>FERC Jurisdiction</h3>
<p>But the FERC issued an order April 1 accepting filings by AEP, ComEd, Dayton Power and Light Co., and Dominion Virginia Power (called the "New PJM Cos.") to further the process of their joining PJM. The facilities' integration was to take place in phases, with AEP notifying FERC it would not transfer facilities to PJM until May 1, 2003, at the earliest. </p>
<p>Protests were filed at FERC against the Virginia law by the Pennsylvania, Ohio, and Michigan commissions, asking FERC either to direct AEP to join an established RTO, or to require AEP to enter into an operating agreement with a third party, such as PJM, thereby contractually transferring control of its transmission. The commissions argued that individual states should not be allowed to interfere with the national goal of creating a strong wholesale energy market.</p>
<p>Exelon, parent company of ComEd, filed in support of the commissions, arguing that Virginia's enactment of the legislation will affect transfer of interstate transmission operations and development of wholesale energy markets, which are matters beyond any single state's jurisdiction. Exelon also argued that the Virginia legislation is prempted by FERC's exclusive jurisdiction over wholesale transmission in interstate commerce, and it may prevent customers of utilities in other states from obtaining benefits of RTO membership.</p>
<p>FERC in its April 1 order found that transfer of ComEd's and AEP's facilities to PJM control is consistent with the public interest, and the commission approved the transfer. FERC rejected the Virginia commission's request for dismissal based on its new state law, as well as Virginia's claim that it cannot decide on allowing AEP to join PJM until FERC has issued its SMD rulemaking. FERC said the filings "are validly before the commission, and we are accepting these filings under the FPA, and are not determining the effect of state law." FERC said it found no reason to delay AEP's and ComEd's entry into PJM until it completes its SMD rulemaking.</p>
<hr />
<hr />
<h3>Michigan May Mandate RTO Membership for AEP Subsidiary</h3>
<p>Taking the opposite view from Virginia, the Michigan Public Service Commission is irate that AEP subsidiary Indiana Michigan Power Co. (IMP) has not yet joined an RTO or any FERC-approved transmission entity. On May 28 it directed the utility to file a report by June 30, 2003, on the status of it compliance with section 10w of the state's 2000 restructuring act requiring each investor-owned utility in Michigan to join either an RTO or other multi-state transmission entity.</p>
<p>On April 16, the PSC had issued an order asking IMP to show cause by May 17 why it had not violated section 10w. IMP answered and pointed to the development and subsequent collapse of a stand-alone RTO by the Alliance companies, which include AEP. IMP also said it encountered added obstacles to complying with section 10w and asked that it not be penalized.</p>
<p>The PSC, in its May 28 order, said it believes IMP has had adequate time to comply with the law, and the commission directed it to report on why it should not be found in violation of section 10w and be penalized, which includes being ordered to join a multi-state RTO mandated by the commission. (Case No. U-13360, May 28, 2003, Mich. P.S.C.) -L.A.B.</p>
<h3>In Brief . . .</h3>
<h4>Pennsylvania: Rate Cap Expiration Awaited</h4>
<p>PPL Corp., an electric utility serving much of central Pennsylvania, will seek a rate increase to take effect as soon as its restructuring plan rate cap expires on Jan 1, 2005. The announcement adds to the debate over the success of the Pennsylvania electric restructuring program, and it follows a recent decision by the state PUC to require assignment of customers to competitive power providers in the Philadelphia area in order to boost market development. Up to this point, the PUC has maintained that the move to a competitive market has aided consumers across the state by keeping rates low. PPL would be the first utility to seek an increase in regulated distribution rates since the initiation of the restructuring experiment in 1997.-P.C.</p>
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<a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/comed">ComEd</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/dayton-power-and-light">Dayton Power and Light</a><span class="pur_comma">, </span><a href="/tags/dominion">Dominion</a><span class="pur_comma">, </span><a href="/tags/dominion-virginia-power">Dominion Virginia Power</a><span class="pur_comma">, </span><a href="/tags/exelon">Exelon</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/fpa">FPA</a><span class="pur_comma">, </span><a href="/tags/michigan-public-service-commission">Michigan Public Service Commission</a><span class="pur_comma">, </span><a href="/tags/pjm">PJM</a><span class="pur_comma">, </span><a href="/tags/ppl">PPL</a><span class="pur_comma">, </span><a href="/tags/ppl-corp">PPL Corp</a><span class="pur_comma">, </span><a href="/tags/ppl-corp-0">PPL Corp.</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a> </div>
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Tue, 01 Jul 2003 04:00:00 +0000puradmin11463 at http://www.fortnightly.comCommission Watchhttp://www.fortnightly.com/fortnightly/2003/07-1/commission-watch
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Is the &quot;pathway concept&quot; the answer to Virginia&#039;s qualms?</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Lori A. Burkhart</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - July 1 2003</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><p></p>
<h3>Is the "pathway concept" the answer to Virginia's qualms?</h3>
<p>PJM, at its annual meeting, announced a plan to integrate ComEd into PJM by Oct. 1, pursuant to FERC's April 1 order, despite Virginia's saying no to membership by American Electric Power (AEP) or any other jurisdictional utility, according to PJM spokesman Ray Dotter. PJM introduced the "pathway concept" as a way to work around that state while the jurisdictional issues are being fought at FERC. (May 16 was the deadline for filings at FERC on whether the integration can proceed.)</p>
<p>If AEP does not become a PJM member, Exelon, ComEd's parent, and other market participants would use firm transmission capacity that they have purchased from AEP to link PJM and ComEd. "So folks who are not using their firm transmission capacity can contribute that to an aggregation that would function as sort of a virtual transmission line" Dotter explained.</p>
<p>He added that it is not a single line, but the combination of capacities over whatever lines are between ComEd and PJM, and that pathway would be operated and managed by PJM as a dynamic transmission line. The line would be subject to the same constraints as an actual transmission line.</p>
<p>It will be a two-way link so that power can flow in both directions.</p>
<p>So far, a few hundred megawatts are available from ComEd and Exelon, but PJM believes others might also contribute. For example, if a plant goes down for maintenance, that capacity for a month's down time could be used.</p>
<p>Financially, Dotter compared the situation to subletting office space. "Think of a firm transmission right as leasing transmission capacity, and when it is not needed participants would in a sense sublet it through PJM to others to flow power back and forth," he explained. PJM is in the midst of developing a stakeholder plan and business rules for how it would work. The Market Implementation Working Group is discussing how the pathway might operate, and details are being worked out. July 15 is the target date for a FERC filing on how the integration would work, including the pathway.</p>
<p>Meanwhile, AEP spokesman David M. Hagelin says AEP is moving ahead with the state approval process and is "not waiting per se." He added that the decision to delay joining PJM was made for AEP, not by AEP. "We will comply with Virginia law," he says. Hagelin says AEP considers FERC's April 1 order a "green light" to join PJM, rather than a mandate to do so. Hagelin noted that AEP's intention still is to join PJM (for its ECAR assets), "but it is clear that the timeline will be later than we had projected."</p>
<h3>Virginia-FERC SMD Dust Up: How PJM Got Caught in the Mix</h3>
<p>The trouble for PJM started after it had an agreement in place for AEP and ComEd to join the RTO. Virginia, leery of competitive efforts, decided it was time to slow down. Back in March, the Virginia Corporation Commission first said it was moving forward with AEP's request to transfer control of its transmission facilities to PJM, but the commission asked for supplemental information and said it wanted to consider the application after FERC's proposed standard market design (SMD) was finalized. (This happened before the future of SMD was cast into doubt. See )</p>
<p>The state commission expressed fears over reliability, and it directed AEP to provide a cost-benefit study showing results of joining the RTO from the perspective of the parent company, the Virginia company, other AEP corporate entities, shareholders, customers, and Virginia ratepayers as a whole .</p>
<p>But the Virginia legislature got involved early in April, passing House Bill 2453, which delayed the date by which incumbent electric utilities with transmission must join a regional transmission entity (RTE). It pre-empted the state's restructuring law, which required utilities to join an RTE by Jan. 1, 2001. Now, utilities such as AEP and Dominion Virginia Power are not allowed to join an RTE prior to July 1, 2004, and may only transfer management and control of transmission assets to the RTE by Jan. 1, 2005, subject to state commission approval. </p>
<p>Prior to giving permission, the state commission must find that approval will: (1) ensure that consumers' needs for economic and reliable transmission are met; and (2) meet the transmission needs of electric generation suppliers that do not own, operate, control, or have an entitlement to transmission capacity.</p>
<p>The problem is that AEP, one of the largest investor-owned electric holding companies in the United States, operates in 11 states and would provide the link for PJM to expand its footprint and reach ComEd in Illinois through Virginia, Kentucky, Indiana, West Virginia, and Ohio.</p>
<h3>FERC Jurisdiction</h3>
<p>But the FERC issued an order April 1 accepting filings by AEP, ComEd, Dayton Power and Light Co., and Dominion Virginia Power (called the "New PJM Cos.") to further the process of their joining PJM. The facilities' integration was to take place in phases, with AEP notifying FERC it would not transfer facilities to PJM until May 1, 2003, at the earliest. </p>
<p>Protests were filed at FERC against the Virginia law by the Pennsylvania, Ohio, and Michigan commissions, asking FERC either to direct AEP to join an established RTO, or to require AEP to enter into an operating agreement with a third party, such as PJM, thereby contractually transferring control of its transmission. The commissions argued that individual states should not be allowed to interfere with the national goal of creating a strong wholesale energy market.</p>
<p>Exelon, parent company of ComEd, filed in support of the commissions, arguing that Virginia's enactment of the legislation will affect transfer of interstate transmission operations and development of wholesale energy markets, which are matters beyond any single state's jurisdiction. Exelon also argued that the Virginia legislation is prempted by FERC's exclusive jurisdiction over wholesale transmission in interstate commerce, and it may prevent customers of utilities in other states from obtaining benefits of RTO membership.</p>
<p>FERC in its April 1 order found that transfer of ComEd's and AEP's facilities to PJM control is consistent with the public interest, and the commission approved the transfer. FERC rejected the Virginia commission's request for dismissal based on its new state law, as well as Virginia's claim that it cannot decide on allowing AEP to join PJM until FERC has issued its SMD rulemaking. FERC said the filings "are validly before the commission, and we are accepting these filings under the FPA, and are not determining the effect of state law." FERC said it found no reason to delay AEP's and ComEd's entry into PJM until it completes its SMD rulemaking.</p>
<hr />
<hr />
<h3>Michigan May Mandate RTO Membership for AEP Subsidiary</h3>
<p>Taking the opposite view from Virginia, the Michigan Public Service Commission is irate that AEP subsidiary Indiana Michigan Power Co. (IMP) has not yet joined an RTO or any FERC-approved transmission entity. On May 28 it directed the utility to file a report by June 30, 2003, on the status of it compliance with section 10w of the state's 2000 restructuring act requiring each investor-owned utility in Michigan to join either an RTO or other multi-state transmission entity.</p>
<p>On April 16, the PSC had issued an order asking IMP to show cause by May 17 why it had not violated section 10w. IMP answered and pointed to the development and subsequent collapse of a stand-alone RTO by the Alliance companies, which include AEP. IMP also said it encountered added obstacles to complying with section 10w and asked that it not be penalized.</p>
<p>The PSC, in its May 28 order, said it believes IMP has had adequate time to comply with the law, and the commission directed it to report on why it should not be found in violation of section 10w and be penalized, which includes being ordered to join a multi-state RTO mandated by the commission. (Case No. U-13360, May 28, 2003, Mich. P.S.C.) -L.A.B.</p>
<h3>In Brief . . .</h3>
<h4>Pennsylvania: Rate Cap Expiration Awaited</h4>
<p>PPL Corp., an electric utility serving much of central Pennsylvania, will seek a rate increase to take effect as soon as its restructuring plan rate cap expires on Jan 1, 2005. The announcement adds to the debate over the success of the Pennsylvania electric restructuring program, and it follows a recent decision by the state PUC to require assignment of customers to competitive power providers in the Philadelphia area in order to boost market development. Up to this point, the PUC has maintained that the move to a competitive market has aided consumers across the state by keeping rates low. PPL would be the first utility to seek an increase in regulated distribution rates since the initiation of the restructuring experiment in 1997.-P.C.</p>
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Tue, 01 Jul 2003 04:00:00 +0000puradmin11258 at http://www.fortnightly.comCommission Watchhttp://www.fortnightly.com/fortnightly/2003/02-0/commission-watch
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>While electric restructuring pauses, telecom pushes forward.</p>
</div></div></div><div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Phillip S. Cross</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - February 15 2003</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><h1 class="title">State PUCs Show Split Personality</h1>
<p> </p>
</p>
<p> </p>
<h3>While electric restructuring pauses, telecom pushes forward.</h3>
<p><b class="hook">No matter which way they turn,</b> state public utility commissions (PUCs) have their work cut out for them.</p>
<p>While federal policy-makers push ahead with wholesale market reforms in the electricity sector, many at the state level now call for a cautious approach to protect consumers.</p>
<p>The same does not appear to be true in the area of telecommunications local exchange service. Although much-publicized statements by federal telecommunications regulators signal a possible shift away from network rates aimed at encouraging new market entrants, state regulators see possible benefits to consumers if a competitive telecommunications market is allowed to mature. Regulators in Kansas tout the significant number of competitors in that state's telephone market, and in Pennsylvania, utility commissioners brag about the success of an outreach program designed to educate consumers about alternative carriers.</p>
<p>However, at the same time, electric market watchers in Ohio, Oregon, and Virginia warn that moves to further deregulate electric service might harm customers rather than help them, especially in the residential sector. The lack of competitive entrants in retail power markets is the most glaring defect. But at the same time, consumers seem alarmed by the recent power market crisis and by troubles associated with the marketing of competitive telephone services and, in Oregon, wary of potential marketing practices and gimmicks.</p>
<h3>FCC Plan Alarms PUCs</h3>
<p>In January, Federal Communications Commission (FCC) Chairman Michael Powell announced that he was considering a proposal allowing telecommunications local exchange carriers (LECs) to increase prices for network services provided to competing carriers. Regional phone companies have long maintained that the services they must provide to competing carriers are priced too low and that, as a result, some of today's competitive activity is artificial and harmful to regulators' long-term goal of promoting true facilities-based competition.</p>
<p>Stock prices for Bell carriers rallied on the news but fell back the following day as brokerage group UBS Warburg downgraded its investment recommendations on Verizon Communications Inc., SBC Communications Inc., and BellSouth Corp., finding the price spike unjustified. UBS Warburg also warned that network pricing reform could be delayed by legal battles and might not provide expected benefits to earnings. Investment analysts explained that any such change must first be debated by the FCC and state regulators and could land in federal court.</p>
<p>Recent statements by state PUCs support this view. Even though the states balked when the FCC began implementing the Telecommunications Act of 1996 in a way that forced LECs to favor competitors with discounted network service rates, the same regulators are now complaining as the FCC suggests that it might be time to modify the policy.</p>
<p>In a January press release, the National Association of Regulatory Utility Commissioners (NARUC) noted that the Competitive Telecommunications Association (CompTel) released a study, based on state-by-state data collected by the Telecommunications Research and Action Center, indicating that consumers could save up to $9.24 billion a year in lower phone bills nationwide if vigorous local phone service is allowed to flourish. According to CompTel, the customers that are seeing the greatest savings rely primarily on competitive service providers that rely on the so-called "unbundled network element platform," or UNE-P.</p>
<p>Late last year the Kansas State Corporation Commission sent a letter to its congressional delegation in Washington, D.C., expressing disagreement with the argument that the pricing of LEC unbundled network elements is the root cause of the financial crisis in the telecommunications industry. The commission noted that Southwestern Bell Telephone Co., the regional dominant LEC, had reduced some of its UNE-P rates on its own initiative in connection with its application to begin providing long-distance telephone service in Kansas. The commission also pointed out that the Bell operating companies currently are not entering each other's local service markets. The commission asked why, if the network services are priced too low, the Bells weren't seeking to take advantage of the situation.</p>
<p>The Pennsylvania PUC, known for its advocacy of electric restructuring, recently began promoting its success in developing a competitive market for local telephone service in that state.</p>
<p>A multimedia grassroots campaign to educate Pennsylvanians about local telephone competition has driven more than 5 million hits to the "utility choice" Web site (<a href="http://www.utilitychoice.org">www.utilitychoice.org</a>), which allows consumers to type in their area codes and exchanges (the first three digits of their telephone number) to view and compare local telephone service providers, plans, and prices in a convenient side-by-side list. The site provides shopping information for electric and natural gas consumers. According to the PUC, there are about 250 companies certified to provide local telephone service in Pennsylvania; approximately 40 of these competitors offer residential local service.</p>
<h3>Oregon Consumers Doubt Restructuring</h3>
<p>An evaluation of the competitive power market for residential service conducted by the Oregon PUC indicates that now is not the time to proceed with further deregulation of the electric industry in that state. The state PUC said that there was little evidence of competition, and it could not determine how well it might work from a consumer perspective, even for the largest customers. Utility-sponsored rate options, including market-based pricing and time-of-use programs, currently provide some of the benefits expected from a fully functioning competitive market, the PUC concluded.</p>
<p>According to the PUC market report, consumers in Oregon are not enthusiastic about having energy options. A survey conducted by a professional market research firm found that participants fear that the introduction of new electricity options would lead to problems similar to those they have already experienced with telephone companies, such as hidden charges, unreliable service, and aggressive phone solicitations. The PUC also emphasized that residential consumers are not knowledgeable about energy procurement, making consumer protection and public education efforts a vital concern. It said that some of the problems already seen in the telephone market might be worse from the consumer standpoint because electric use is less discretionary.</p>
<p>The PUC report found:</p>
</p>
<ul>
<li>There likely would be few, if any, power suppliers competing for residential consumers;</li>
<li>The cost of implementing a competitive market for residential consumers exceeds the likely benefits;</li>
<li>Competitive power markets for residential consumers have not been in place long enough in other states to learn from their experiences; and</li>
<li>Residential consumers are not well suited to assess or manage the risks of a competitive retail market.</li>
</ul>
<p>According to the PUC market report, seven electricity service suppliers are certified to provide competitive service in Oregon, but only three-IdaCorp Energy, Sempra Energy, and Strategic Energy-have an agreement with a utility to begin offering service. No provider is actually providing service to large business customers, the report said. In addition, the PUC has also registered several aggregators for electric service to nonresidential customers, but aggregation has not yet developed. The PUC said that aggregation is likely to be most successful where electric rates are highest, citing high costs for customer acquisition and administration. The commission also said some costs, such as advertising, would be higher per person in Oregon than in states that already allow residential customers to choose power suppliers, because the state's total population is smaller and less dense than in other regions.</p>
<p>The PUC acknowledged that residential electric rates have declined in states with competitive power markets, but said the phenomenon is due largely to mandated rate reductions or regulatory requirements that competing offers stay below benchmarks during the transition to competition. The PUC said that it could not determine what might happen when such regulations expire. It concluded, however, that typical monthly savings publicized in states promoting competition have been small-from 2 percent to 10 percent of the generation portion of an average customer's monthly bill. It also said that a recent analysis of competitive energy markets in five states found that residential consumers are likely to be worse off with any price plan that exposes them to short-term volatile rates in an immature market. The same study found that none of the states had sustained a robust market for energy services aimed at residential customers. Marketer offers and customer participation have declined steadily over time, the PUC said.</p>
<h3>Ohio Electric Market Update</h3>
<p>The Ohio Consumer Counsel (OCC), in its 2002 annual report on the state of electric competition, put a positive spin on the tentative response of providers and consumers to retail access seen in the state. At that time, it reported that electric choice was "off to a reasonably good start," and while competition was slow to develop, consumers were benefiting from rate reductions mandated under the Ohio electric restructuring law. But as Ohio begins its third year of retail electric competition, the OCC now sees continuing cause for concern about the health of the state's electric marketplace and the potential long-term risks for Ohio's residential electric consumers. [Tables shown on page 13 include switching statistics for 2001 and 2002.]</p>
<p>Confusion and inaction with regard to federal transmission market issues is a major barrier to possible improvement, says a state-funded residential consumer advocacy group. The report suggests that state policy-makers consider what would happen if there were few or no competing electric suppliers when the market development periods end, and what price protections consumers will have when the current rate freeze disappears.</p>
<p>According to the OCC update, when Ohio's retail electric market was opened to competition in 2001, the Public Utilities Commission of Ohio certified 38 suppliers to sell electricity to all customer classes. By the end of 2002, just two suppliers were actively marketing to the state's residential customers.</p>
<p>Explaining away what might seem a modest success at customer switching, the OCC report notes that through 2002, approximately 813,000 residential consumers statewide-or about 20 percent of those who are eligible to participate in electric choice-actually switched electric suppliers. However, more than 90 percent of those who switched suppliers participated in one of the more than 190 community aggregation groups in the state, and about 98 percent previously bought their electricity from one of the three FirstEnergy companies (Ohio Edison, Toledo Edison, and Cleveland Electric Illuminating). Residential customers in Central and Southern Ohio, and in the Miami Valley, have had virtually no choices for alternative suppliers, according to the OCC.</p>
<p>The OCC concludes that "prompt and decisive" action by the PUC is needed to ensure that residential electric customers receive the benefits-and the safeguards-that Ohio's electric choice legislation intended. One such action is directed at moving forward with regional transmission market reforms. The OCC said that it has filed formal complaints against American Electric Power (AEP) and Dayton Power and Light (DP&amp;L) for failing to comply with the provision of their transition case settlements requiring them to turn over operational control of their transmission systems to an approved independent regional transmission organization (RTO). The OCC has asked the PUC to:</p>
<p>(a) suspend payment of transmission costs to the utilities; (b) levy fines against the utilities; and (c) limit the utilities' ability to move to market-based retail rates at the end of their market development periods. Both AEP and DP&amp;L have argued that the PUC has no authority to consider the OCC's complaints, let alone impose these remedies.</p>
<h3>Virginia SCC Sees SMD/Market Problems</h3>
<p>The Virginia State Corporation Commission (SCC) formally has expressed concern that adoption of new rules governing wholesale power market design at the federal level could result in an "involuntary (or possibly inadvertent) loss of day-to-day authority over the price and reliability of electric service" for Virginia citizens.</p>
<p>On Jan. 3, 2003, the SCC released a detailed review of the proposed standard market design (SMD) initiative currently under way at the Federal Energy Regulatory Commission and potential risks to electric service in Virginia. The SCC suggested that the state legislature suspend electric deregulation for the time being, noting that the state was particularly vulnerable to loss of authority over retail electric prices and reliability because rates had already been unbundled and the state restructuring law currently requires utilities to join an RTO. It said that such a suspension, including the reversal of the mandate placed on electric utilities to join an RTO, could allow the state the opportunity to determine whether Virginia should be part of the new federal regulatory system and whether retail choice should continue at this time. The SCC said that state policy-makers should "decide promptly" to proceed with, or delay implementation of the state's electric restructuring law.</p>
<p>The SCC report characterizes the proposed SMD as a watershed event for the Virginia electric industry, especially FERC's dedication to the elimination of the native load preference. The SCC said that FERC believes that market-based price signals will do a better job than state regulators at determining where and when generation and transmission facilities need to be built, and that ultimately, competition may regulate the reliability and price of electric service.</p>
<p>The SCC said that, nevertheless, the current generation and transmission infrastructure, including facilities built specifically to serve Virginia, was not designed to support a competitive market. Under such circumstances the removal of the native load preference could result in a situation where on the hottest and coldest days of the year, or whenever something threatens the integrity of the regional transmission system, Virginians could experience service interruptions to make sure that the lights stay on somewhere else in the multi-state region. This could occur even though there is adequate capacity located in Virginia. The SCC also said that because the SMD includes a regional market pricing mechanism, generation entities with market power may be able to charge exorbitant rates unless the situation is identified and corrected in a timely manner. It added that the ability of the Federal Energy Regulatory Commission to monitor potential market abuses and correct such problems has been questioned in the past.</p>
<p>The report also indicates that retail competition has not been successful in most areas of the nation. It points out that nine of the 17 jurisdictions with residential retail choice have no competitive offers below the rates of the incumbent utilities. In several other states only one utility faces a competitive offer. The SCC acknowledged that there were some initial indications of success in states like Pennsylvania, but it also noted that these were "largely the result of regulatory action to lower incumbent utility rates while setting market rates at artificially high levels to encourage competitors." Further retail competition is not functioning in Virginia, the SCC said. No offers of any kind are currently being marketed in the state. Only three competitive suppliers are currently certified to make such offerings. In addition, a number of merchant generation projects were delayed or abandoned in Virginia during 2002. The number of power suppliers is diminishing in Virginia and the rest of the nation as such entities face bankruptcy, merge, or simply go out of business.</p>
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<a href="/tags/aep">AEP</a><span class="pur_comma">, </span><a href="/tags/american-electric-power">American Electric Power</a><span class="pur_comma">, </span><a href="/tags/bankruptcy">bankruptcy</a><span class="pur_comma">, </span><a href="/tags/bc">BC</a><span class="pur_comma">, </span><a href="/tags/commission">Commission</a><span class="pur_comma">, </span><a href="/tags/communication">Communication</a><span class="pur_comma">, </span><a href="/tags/dayton-power-and-light">Dayton Power and Light</a><span class="pur_comma">, </span><a href="/tags/fcc">FCC</a><span class="pur_comma">, </span><a href="/tags/federal-communications-commission">Federal Communications Commission</a><span class="pur_comma">, </span><a href="/tags/federal-communications-commission-fcc">Federal Communications Commission (FCC)</a><span class="pur_comma">, </span><a href="/tags/federal-energy-regulatory-commission">Federal Energy Regulatory Commission</a><span class="pur_comma">, </span><a href="/tags/ferc">FERC</a><span class="pur_comma">, </span><a href="/tags/firstenergy">FirstEnergy</a><span class="pur_comma">, </span><a href="/tags/naruc">NARUC</a><span class="pur_comma">, </span><a href="/tags/national-association-regulatory-utility-commissioners">National Association of Regulatory Utility Commissioners</a><span class="pur_comma">, </span><a href="/tags/ohio-edison">Ohio Edison</a><span class="pur_comma">, </span><a href="/tags/public-utilities-commission-ohio">Public Utilities Commission of Ohio</a><span class="pur_comma">, </span><a href="/tags/rto">RTO</a><span class="pur_comma">, </span><a href="/tags/sempra">Sempra</a><span class="pur_comma">, </span><a href="/tags/sempra-energy">Sempra Energy</a><span class="pur_comma">, </span><a href="/tags/toledo-edison">Toledo Edison</a><span class="pur_comma">, </span><a href="/tags/ubs">UBS</a><span class="pur_comma">, </span><a href="/tags/verizon">Verizon</a> </div>
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Sat, 15 Feb 2003 05:00:00 +0000puradmin11165 at http://www.fortnightly.comPeoplehttp://www.fortnightly.com/fortnightly/2002/12/people
<div class="field field-name-field-import-deck field-type-text-long field-label-inline clearfix"><div class="field-label">Deck:&nbsp;</div><div class="field-items"><div class="field-item even"><p>We welcome submissions to People, especially those accompanied by a Color Photograph. Send to:</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - December 2002</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><blockquote><p><b>Gregory Ebel</b> has been named vice president, investor and shareholder relations, at Duke Energy. He succeeds <b>Sue Becht</b>, who is planning to retire in February, 2003. Ebel was formerly the managing director of mergers and acquisitions at Duke; prior to the merger of Duke Power with Westcoast Energy, he worked at Westcoast. Becht is a 27-year veteran of Duke. Duke also honored four employees with its Pinnacle Award, the company's highest award for outstanding contributions to the company's success. The honorees were: <b>Vincent David</b>, manager, financial analysis, in the Energy Services division; <b>Patrick Hester</b>, senior vice president and general counsel, at the Maritimes &amp; Northeast Pipeline; Hugh McCutcheon, manager, customer business application, at Duke Power; and <b>Dennis O'Toole</b>, division manager, application architecture, at Duke Power.</p>
<p><b>Eric van der Walde</b> has resigned as executive vice president of wholesale at American Electric Power. He will be succeeded by <b>Holly Koeppel</b>, who as executive vice president of Energy Services will head AEP's unregulated businesses. Prior to joining AEP in 2000, Koeppel worked for over 15 years at Consolidated Natural Gas. AEP also announced that <b>Michael Rencheck</b> will become president of the company's Pro Serv organization. Previously, he had served as senior vice president for engineering and regional operations at AEP Pro Serv. Rencheck succeeds <b>John Jones</b>, a 36-year veteran of AEP, who is retiring.</p>
<p><b>Bruce Williamson</b> has been named president and CEO of Dynegy. Williamson has spent the last five years at Duke Energy, most recently as president and CEO of Duke Energy Global Markets. Prior to that, he held positions at PanEnergy Corp. (which merged with Duke Power in 1997), and at Royal Dutch/Shell Group. Dynegy also announced that <b>Sheli Rosenberg</b>, vice chairman of Equity Group Investments, has resigned from the Dynegy board of directors.</p>
<p>E.ON Energie has appointed <b>Johannes Teyssen</b> as its new chairman, effective May 2003. Teyssen will succeed <b>Hans-Dieter Harid. Bernd Romeike</b> has been promoted to the position formerly held by Teyssen as head of company finance.</p>
<p><b>Charles MacInnis</b>, the director of news and information at Consumer's Energy, has retired after 23 years with the company. He joined the utility in 1979 as a writer in employee communications, and rose through the ranks. Prior to joining Consumer's, MacInnis was a weatherman and reporter for a Michigan television station. Consumer's also announced that <b>Doyle N. Beneby, Jr.</b>, has been promoted to site business manager at the company's Karn/Weaddock Generating Plant. He succeeds <b>John Dobbs</b>, who is retiring after 36 years with the company.</p>
<p><b>Reese Feuerman</b> has joined Constellation Energy Group as vice president and corporate controller. He succeeds <b>Richard Bange</b>, who retired after 30 years with Constellation. Prior to joining Constellation, Feuerman most recently was vice president and corporate controller at XO Communications.</p>
<p><b>Terry K. Eller</b> has been named corporate vice president of investor relations at Washington Group International. Previously, she had served as associate general counsel. She has been with the company for a total of eight years, with stints at MK Gold Co. and J.R. Simplot Co. </p>
<p>Energen Corp. announced that <b>Dudley Reynolds</b> has been named president of Algasco, and <b>David Woodruff, Jr</b>. has been named general counsel and corporate secretary of Energen. Both appointments are effective January 2003. Reynolds currently serves as general counsel and secretary of Energen, and is a 22-year veteran of the company. Woodruff currently serves as vice president, legal, and assistant secretary. He has been with the company since 1986.</p>
<p><b>Mark Hegedus</b> has rejoined the law firm of Spiegel &amp; McDiarmid. For the last four years, he served as a trial attorney in the Transportation, Energy, and Agriculture section of the antitrust division at the Department of Justice. </p>
<p><b>Kevin Crawford</b> has assumed new responsibilities at DPL Inc. In addition to acting as director of purchasing, Crawford has assumed the duties of fuel procurement for the company's coal-fired generation. He has been with DPL since 1988. Dayton Power and Light Co. is one of DPL's principal subsidiaries.</p>
<p>Wilbros Group Inc. has appointed <b>Jay T. Dalton</b> as senior vice president and general counsel. Dalton has served as legal counsel to the company since 1993. Prior to that, he served as associate general counsel of a major international oil company.</p>
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Sun, 01 Dec 2002 05:00:00 +0000puradmin11537 at http://www.fortnightly.comCompetitive Efficiency: A Ranking of U.S. Electric Utilitieshttp://www.fortnightly.com/fortnightly/1997/06-0/competitive-efficiency-ranking-us-electric-utilities
<div class="field field-name-field-import-byline field-type-text-long field-label-inline clearfix"><div class="field-label">Byline:&nbsp;</div><div class="field-items"><div class="field-item even"><p>Hossein Haeri, M. Sami Khawaja, and Matei Perussi</p>
</div></div></div><div class="field field-name-field-import-volume field-type-node-reference field-label-inline clearfix"><div class="field-label">Magazine Volume:&nbsp;</div><div class="field-items"><div class="field-item even">Fortnightly Magazine - June 15 1997</div></div></div><div class="field field-name-body field-type-text-with-summary field-label-hidden"><div class="field-items"><div class="field-item even"><p>Do mergers and "critical mass" really make a difference? The answer, it seems, is yes.</p>
</p>
<p> To become more competitive, U.S. electric utilities have embarked on a quest in recent years to improve operational efficiency and factor productivity. The question is: Are utilities making progress? And, which companies have gained a competitive edge? Which have not? </p>
<p> Industry analysts have long argued that given the structure of the markets they serve and their cost-based, rate-setting procedures, electric utilities tend toward monopolistic behavior. Consequently, they are prone to wasteful applications of resources, especially overcapitalization. Without proper incentives, the argument went, utility managers have little motivation to cut costs or improve efficiency. As Hicks has argued, they would be more likely to exploit their market power by not bothering to approach maximum efficiency. "The best of monopoly profits," Hicks suggests, "is a quiet life." </p>
<p> These arguments, however, are waning quickly as the bang and clatter of competition disturbs the utility manager's "quiet life." Prompted by the discipline imposed by competitive markets and the demands of incentive regulation, utilities are paying increasing attention to the economic fundamentals of electricity production and delivery. </p>
<p> An examination of efficiency improvements at U.S. utilities, as measured by megawatt-hours per employee, reveals a modest increase (0.5 percent per year) between 1990 and 1995, mostly after 1993. This has led to moderately lower average system rates (see Figure 1). Variable expenses have declined in nearly all categories of operation and maintenance, fuel and labor. Price stability in the oil markets and better procurement practices also have helped control fuel input costs. In fact, labor productivity has shown steady annual improvements of more than 6 percent per annum, increasing from 4,670 MWh per employee (1990) to 6,420 MWh per employee (1995). </p>
<p> We have estimated the operational efficiencies for 94 U.S. electric utilities from 1990 to 1995 using conventional statistical techniques. As might be expected, the patterns that emerge appear to show some link between operational performance and geographic location. Also, to lend credence to the current "merger mania," we found that size of operation (and the fact of the merger itself) does appear to act as a significant determinant of overall efficiency. </p>
<p> Measures and Models </p>
<p> One measure of operational efficiency is productivity (em the ratio of outputs to inputs. Productivity among firms can vary due to several factors, however, such as </p>
<p> differences in production technologies, environments in which production takes place and efficiencies of the production processes. A firm is efficient if it cannot increase its output without adding more inputs; or, conversely, if it cannot decrease the quantity of its inputs without reducing its output. </p>
<p> Productive efficiency has two components: technical and allocative. The technical component marks the ability to produce as much output as possible with available inputs, or using as little input as possible to produce the same level of output. The allocative component tracks the ability to combine inputs and outputs in optimal proportions under prevailing prices. In other words, it is the flexibility to adjust the mix of inputs as their prices change. Here, we measure overall operational efficiency without breaking it into components. %n1%n </p>
<p> Methods for measuring efficiency can be divided into two families, each comprising several specific techniques. One group of measurement techniques relies on mathematical programming. Using observed outputs and inputs for a group of firms, the algorithm calculates a measure of how efficient each firm is in converting inputs into outputs. This calculation is done by constructing a production "frontier" and measuring each firm's distance from it. %n2%n The other family is econometric. This family involves applying regression techniques to calibrate a production function that compiles information on inputs, outputs and other production characteristics of a group of firms over one or more periods. Each firm's efficiency is measured by comparing it with other firms in the group. </p>
<p> In general, efficiency is almost always measured in relative terms, comparing one firm with another firm or with an industry average (benchmarking). A firm can also be compared with itself at different times (trend analysis), or its performance can be evaluated against its goals (goal or "gap" analysis). The difference between efficiency levels under the operationally best possible resource </p>
<p> allocation and the actual resource allocation is the degree of x-inefficiency (em the familiar concept introduced by Harvey Leibenstein in 1966. </p>
<p> Our Approach </p>
<p> Utilities use technology to transform capital, labor, energy and materials into electricity. The physical relationship between the amounts of each input and electricity produced can be expressed as a production function. In our analysis, we used a simple formulation of the production function known as the Cobb-Douglas. Under this formulation, output, measured in MWh, depends on capital, labor, fuels and materials used by utilities. A load factor variable was included to account for idle capacity. A trend variable was used to capture the time-varying effect of technology. %n3%n </p>
<p> Except for the Producer Price Index, which came from the Bureau of Labor Statistics, all other data came from Edison Electric Institute's Uniform Statistical Reports. Data were gathered on each variable from 1990 through 1995. We chose the holding company as the analysis unit rather than the operating company. Mergers during the data period were aggregated into single holding-company level. The analysis began with the complete database for all EEI member utilities. Only utilities with complete data for all variables in all six years were kept. This criterion left 94 observations for use in the analysis. </p>
<p> Output was measured as total physical production in MWh sold to all accounts (Schedule 14). Input variables were capital, labor, fuel, operating expenses and load factors. Fuel inputs were total outlays for all fuels in real dollars (Schedule 14). Operating expenses were the sum of all expense accounts and included operation, maintenance, depreciation, depletion, amortization and property losses, excluding local taxes (Schedule 2). Annual load factors were obtained from Schedule 17. All monetary variables were expressed in real terms, deflated by the PPI. </p>
<p> Leaders and Laggards </p>
<p> The statistical results from calibrating the production function showed that all included variables affected output and, together, explained more than 99 percent of its variations. %n4%n Estimated efficiency rankings and percentage changes in overall relative efficiency from 1990 to 1995 for the 94 companies are listed in Table 1. From 1990 to 1995, American Electric Power, Washington Water Power, and Southwestern Public Service Co., followed narrowly by Allegheny Power and PacifiCorp, led other utilities in the group in average efficiency. </p>
<p> Bangor Hydro-Electric Co., Upper Peninsula Energy, and Maine Public Service Co. scored the lowest, lagging the leaders nearly 22 percent. In interpreting the figures, it should be noted these are normalized scores and represent relative rankings rather than absolute efficiencies. In other words, scores of 100 and 99 for AEP and PacifiCorp, respectively, should not be construed as the actual operational efficiencies for the two utilities. Instead, the figures mean that over the five-year period, Idaho Power has been, on average, 1 percent more efficient than PacifiCorp. </p>
<p> Comparing the top three performers with the bottom three, marked differences emerge between the groups regarding location and size, as measured in MWh sales. The differences in rates are most striking. During the five years of the analysis period, the average system rates for the bottom three utilities were almost exactly double the average rates of the top three. The best performers are much larger than the worst, and are concentrated in the Northwest. Marked differences between the two groups are apparent in several important dimensions, including labor productivity, average operating expenses and, especially, percentage of purchased power. </p>
<p> Six of the 10 top performers are in the Pacific Northwest; eight of the 10 bottom performers come from the Northeast. The data show that, compared with the top three utilities, on average, the bottom three utilities lag in sales per employee by nearly a 3-to-1 margin, and purchase a far greater portion of their power from outside sources. The bottom group also has slightly higher proportions of residential customers. No apparent differences emerge between the two groups regarding wages (Table 2). </p>
<p> Close examination of utility efficiency scores reveal several important patterns, as shown in Table 3. Size of the operation is a significant determinant of efficiency and matters considerably in overall rankings. It shows a strong relationship with efficiencies due to economies of scale. The results suggest as much as a 5-percent difference in efficiency between utilities in the largest group and those in the smallest group. </p>
<p> Contributions of economies of scale to efficiency are also apparent when we consider company structure (individual operating company vs. holding company). For example, holding companies show slightly higher efficiencies than individual operating companies. More important, five of the six holding companies resulting from mergers during 1990-1995 show above-average efficiency gains. The one-half of the utilities in the sample that are combined operations show slightly higher efficiencies, resulting possibly from economies of joint production. </p>
<p> Northwest utilities lead in overall efficiency. Southeastern, Southern and North-Central utilities follow the Northwest by a high 5-percent margin. A utility's reliance on nuclear generation, measured as nuclear fuel outlays, also shows a strong negative correlation with efficiency; the higher the share of nuclear fuel costs, the lower the operational efficiency. Inversely, we find a strong relationship between operational efficiency and the share of hydroelectric power in a utility's generation mix. </p>
<p> The Incentive to Improve </p>
<p> The efficiency by which a utility uses its resources directly influences its profitability. In fact, increased productivity may be the most important determining factor in a utility's operations for both regulated and competitive markets. Judging by current trends, there is little doubt that those functions of electric utilities that remain regulated will be subject to incentive ratemaking in one form or another. In all forms of incentive regulation, retained earnings are largely decided based on their specific factor productivities (partial incentive mechanisms) or overall efficiency gains (price cap formulas). It seems, therefore, reasonable to expect utilities will have every incentive to improve their efficiency by closely monitoring operations and controlling costs. </p>
<p> Efficiency also bears directly on price, determining the utility's ability to compete in commodity markets. Our study suggests a close association between </p>
<p> efficiency rankings and average system rates for utilities in the sample (Figure 2). In fact, the results suggest efficiency scores account for more than 60 percent of the variations in average system rates. </p>
<p> As John Kenneth Galbraith has said, "Things that are measured tend to improve." Operational efficiency has never been more important for electric utilities than it is today, as they embark on the new era of retail access and competition. As competition intensifies, market pressures will inevitably force prices toward marginal costs, leading to shrinking margins and a greater demand for operational efficiency. Productive efficiency will emerge as the survival condition in a competitive environment. </p>
<p> Hossein Haeri, M. Sami Khawaja and Matei Perussi and are economists in the Portland, Ore., offices of Barakat &amp; Chamberlin Inc., a consulting firm that provides technical and strategic services to the utilities industry. </p>
<p> Table 1. Relative Efficiency Rankings for 94 Electric Utilities </p>
<p> Relative </p>
<p> Efficiency </p>
<p> Relative Change from </p>
<p> Rank Utility Efficiency '90 to '95 </p>
</p>
<p> 1 American Electric Power Co. 100.00% 1.62% </p>
<p> 2 Washington Water Power Co. 99.99% -2.26% </p>
<p> 3 Southwestern Public Svc. Co. 99.53% 2.33% </p>
<p> 4 Allegheny Power System 99.36% -2.02% </p>
<p> 5 PacifiCorp 99.21% 0.96% </p>
<p> 6 Idaho Power Co. 99.17% 1.41% </p>
<p> 7 Kentucky Utilities Co. 98.50% 4.11% </p>
<p> 8 Portland General Electric Co. 97.50% -0.74% </p>
<p> 9 Puget Sound Power &amp; Light Co. 97.41% -0.89% </p>
<p> 10 Minnesota Power 96.84% 0.89% </p>
<p> 11 Southern Co. 96.67% 1.11% </p>
<p> 12 Northern States Power Co. 96.54% 0.80% </p>
<p> 13 Montana Power Co. 96.50% -0.79% </p>
<p> 14 Louisville Gas and Electric Co. 96.11% 1.59% </p>
<p> 15 Cincinnati Gas &amp; Electric Co., </p>
<p> Cinergy Corp. * 95.94% 4.38% </p>
<p> 16 Union Electric Co. 95.93% 5.65% </p>
<p> 17 Central and Southwest Corp. 95.76% 2.41% </p>
<p> 18 Texas Utilities Co. 95.72% 1.92% </p>
<p> 19 Duke Power Co. 95.06% 3.22% </p>
<p> 20 Ipalco Enterprises 95.03% 2.27% </p>
<p> 21 Kansas Power and Light Co., </p>
<p> Western Resources * 94.55% 1.70% </p>
<p> 22 Oklahoma Gas and Electric Co. 94.53% 1.32% </p>
<p> 23 So. Indiana Gas &amp; Electric Co. 94.44% 2.01% </p>
<p> 24 Houston Lighting &amp; Power Co. 94.29% 2.21% </p>
</p>
<p> Relative </p>
</p>
<p> Efficiency </p>
<p> Relative Change from </p>
<p> Rank Utility Efficiency '90 to '95 </p>
</p>
<p> 25 Scana Corp. 93.68% 1.16% </p>
<p> 26 Entergy Corp. 93.67% 0.98% </p>
<p> 27 Virginia Electric and Power Co. 93.50% 2.50% </p>
<p> 28 Wisconsin Power and Light Co. 93.44% 2.44% </p>
<p> 29 Iowa Power, Midwest Power, </p>
<p> MidAmerican * 93.38% 5.71% </p>
<p> 30 Dayton Power and Light Co. 93.05% 2.08% </p>
<p> 31 Carolina Power &amp; Light Co. 92.91% 2.32% </p>
<p> 32 Wisconsin Public Service Corp. 92.81% 3.31% </p>
<p> 33 Empire District Electric Co. 92.65% 0.68% </p>
<p> 34 Kansas City Power &amp; Light Co. 92.51% 8.31% </p>
<p> 35 Public Service Co. of Colorado 92.48% 1.53% </p>
<p> 36 Gulf States Utilities Co. 92.39% 4.22% </p>
<p> 37 Pennsylvania Pwr. &amp; Light Co. 92.33% 2.84% </p>
<p> 38 Cipsco, </p>
<p> Central Illinois Public Service * 92.32% 9.05% </p>
<p> 39 Potomac Electric Power Co. 92.06% -0.27% </p>
<p> 40 Interstate Power Co. 91.90% 0.98% </p>
<p> 41 Illinois Power Co. 91.87% 8.34% </p>
<p> 42 Florida Power Corp. 91.66% 0.81% </p>
<p> 43 Iowa-Illinois Gas &amp; Electric Co. 91.59% 1.48% </p>
<p> 44 Consumers Power Co. 91.57% 0.90% </p>
<p> 45 Nevada Power Co. 91.51% -0.18% </p>
<p> 46 Otter Tail Power Co. 91.50% 4.50% </p>
<p> 47 Detroit Edison Co. 91.25% 2.93% </p>
<p> 48 Tampa Electric Co. 91.10% -0.58% </p>
</p>
<p> Relative </p>
</p>
<p> Efficiency </p>
<p> Relative Change from </p>
</p>
<p> Rank Utility Efficiency '90 to '95 </p>
</p>
<p> 49 Commonwealth Edison Co. 91.01% 2.83% </p>
<p> 50 Ohio Edison Co. 90.95% 1.77% </p>
<p> 51 Baltimore Gas and Electric Co. 90.74% 6.79% </p>
<p> 52 Central Illinois Light Co. 90.64% 3.21% </p>
<p> 53 Central Louisiana Electric Co. 90.57% 2.32% </p>
<p> 54 Delmarva Power &amp; Light Co. 90.41% 4.35% </p>
<p> 55 NIPSCO Industries 90.10% 3.98% </p>
<p> 56 St. Joseph Light &amp; Power Co. 89.71% 4.25% </p>
<p> 57 Utilicorp United 89.65% 3.45% </p>
<p> 58 Iowa Electric Light &amp; Power Co., </p>
<p> IES Utilities* 89.04% 12.13% </p>
<p> 59 New York State </p>
<p> Electric &amp; Gas Corp. 88.83% 1.35% </p>
<p> 60 Philadelphia Electric Co., </p>
<p> PECO Energy Co. * 88.75% 6.73% </p>
<p> 61 General Public Utilities Corp. 88.60% 0.98% </p>
<p> 62 Public Svc. Enterprise Group 88.42% 1.32% </p>
<p> 63 Arizona Public Service Co. 88.27% 1.73% </p>
<p> 64 Niagara Mohawk Power Corp. 87.75% 0.52% </p>
<p> 65 MDU Resources Group 87.23% 1.34% </p>
<p> 66 Centerior Energy Corp. 86.86% 5.50% </p>
<p> 67 Duquesne Light Co. 86.84% 4.30% </p>
<p> 68 Pacific Gas and Electric Co. 86.77% -0.67% </p>
<p> 69 Sierra Pacific Power Co. 86.71% 0.32% </p>
<p> 70 Northwestern Public Svc. Co. 86.33% 5.90% </p>
<p> 71 Public Svc. Co. of New Mexico 86.26% 9.38% </p>
</p>
<p> Relative </p>
</p>
<p> Efficiency </p>
<p> Relative Change from </p>
<p> Rank Utility Efficiency '90 to '95 </p>
</p>
<p> 72 Cent. Hudson Gas &amp; Elec. Corp. 85.98% 0.61% </p>
<p> 73 Tucson Electric Power Co. 85.82% 6.44% </p>
<p> 74 So. California Edison Co. 85.78% 1.37% </p>
<p> 75 El Paso Electric Co. 85.77% 4.87% </p>
<p> 76 New England Electric System 85.45% 0.45% </p>
<p> 77 Commonwealth Energy System 85.25% 5.02% </p>
<p> 78 San Diego Gas &amp; Electric Co. 85.22% 1.54% </p>
<p> 79 Green Mountain Power Corp. 85.18% -2.17% </p>
<p> 80 Northeast Utilities 85.13% 3.38% </p>
<p> 81 Rochester Gas &amp; Electric Corp. 84.99% 1.37% </p>
<p> 82 Black Hills Corp. 84.90% 0.67% </p>
<p> 83 Long Island Lighting Co. 84.60% -3.68% </p>
<p> 84 Cent. Vermont Public Svc. Corp. 84.30% 4.73% </p>
<p> 85 United Illuminating Co. 83.88% 3.54% </p>
<p> 86 Orange and Rockland Utilities 83.41% 7.63% </p>
<p> 87 Consolidated Edison Co. </p>
<p> of New York 83.25% 3.25% </p>
<p> 88 Boston Edison Co. 82.97% 1.75% </p>
<p> 89 Central Maine Power Co. 82.87% 2.08% </p>
<p> 90 Hawaiian Electric Co. 81.31% -1.78% </p>
<p> 91 Eastern Utilities Associates 80.85% 5.42% </p>
<p> 92 Maine Public Service Co. 80.08% 0.83% </p>
<p> 93 Upper Peninsula Energy Corp. 78.44% 1.39% </p>
<p> 94 Bangor Hydro-Electric Co. 78.32% -1.29% </p>
<p> Average Efficiency 90.49% 2.47% </p>
<p> *Companies merged. </p>
</p>
</p>
<p> Table 2. Comparison of Top and Bottom Performers </p>
</p>
<p> Variable Top 3 companies Bottom 3 companies </p>
<p> Upper Bangor </p>
<p> Washington Southwestern Maine Peninsula Hydro </p>
<p> Water Public Public Energy Electric </p>
<p> AEP Power Service Service Corp. Co. </p>
</p>
<p> Total Sales (MWh) 116,196,875 10,558,467 19,084,259 664,623 808,215 1,725,870 </p>
<p> % Residential Sales 24% 29% 13% 26% 31% 30% </p>
<p> % Industrial Sales 36% 15% 39% 20% 28% 51% </p>
<p> Average System Rate 0.05 0.04 0.04 0.09 0.07 0.10 </p>
<p> Salary per employee 45,755 48,301 43,412 37,006 46,468 40,278 </p>
<p> Total Sales (MWh)/Employee 6,408 10,335 9,403 3,675 1,495 3,469 </p>
<p> Plant in Service ($1000s)/MWh 0.16 0.14 0.12 0.12 0.20 0.16 </p>
<p> Percent Purchased Power 4% 42% 2% 84% 81% 81% </p>
<p> Operating Expense ($1000s)/MWh 0.03 0.03 0.03 0.07 0.06 0.08 </p>
<p> Load Factor 0.63 0.60 0.63 0.64 0.71 0.76 </p>
</p>
<p> Table 3. Comparison of Efficiency by Various Categories </p>
</p>
<p> Number </p>
<p> of utilities Average </p>
<p> Variable Category in category Efficiency </p>
<p> Size (Average MWh) Small = Quartile 1 23 86.7% </p>
<p> Medium= Quartile 2 24 90.8% </p>
<p> Large = Quartile 3 23 92.0% </p>
<p> Very Large = Quartile 4 24 92.4% </p>
<p> Region Northwest 4 98.5% </p>
<p> West 16 89.6% </p>
<p> North-central 21 92.2% </p>
<p> Central / Midwest 9 90.5% </p>
<p> South / Southeast 13 93.9% </p>
<p> East / Northeast 31 87.3% </p>
<p> Nuclear fuel: 0% 39 91.1% </p>
<p> Percent of total fuel cost 1-10% 23 91.0% </p>
<p> 10-20% 19 89.7% </p>
<p> 20-30% 7 88.6% </p>
<p> 30-40% 5 89.0% </p>
<p> over 40% 1 88.7% </p>
<p> Purchase Power - % of total sales 25-50% 32 89.6% </p>
<p> 50-75% 5 86.8% </p>
<p> over 75% 5 81.3% </p>
<p> Utility with gas sales Yes 47 90.7% </p>
<p> No 47 90.3% </p>
<p> Percent Industrial 0-20% 22 89.1% </p>
<p> 20-40% 60 91.0% </p>
<p> over 40% 12 90.0% </p>
<p> Holding Company Yes 30 91.6% </p>
<p> No 64 90.0% </p>
<p> Hydro electric % of sales 0 39 90.0% </p>
<p> 0-10% 47 91.0% </p>
<p> over 10% 8 90.0% </p>
</p>
<p>1Several econometric techniques have been developed for obtaining the measurement of each component. The computational procedures, however, are complex and inexact. </p>
<p>2One study employing this technique was published in PUBLIC UTILITIES FORTNIGHTLY. (See, "The Efficient Utility: Labor, Capital, &amp; Profit," by D. Thomas Taylor and Russell G. Thompson, Sept. 1, 1995, p. 25.) That study used Data Envelopment Analysis, a mathematical programming technique, to estimate relative efficiencies of 13 investor-owned utilities. Some of that study's flaws and certain weaknesses of its methodology were later noted by Matthew Morey and L. Dean Hiebert. (See, "Measuring Utility Efficiency: A New Frontier" [letter to editor], PUBLIC UTILITIES FORTNIGHTLY, Jan. 1, 1996, p. 7.) </p>
<p>3The estimated equation was formulated as: </p>
<p>Ln(Yit) = Siai +SjbjLn(Xijt) + LFit + Îit where Ln(Yit) is the natural logarithm of total output in megawatt hours, Ln(Xijt) is natural logarithm of a set of j inputs (labor, capital, fuel and material), LF is the load factor, and T is a trend variable with values of 1 to 6 representing each year of data from 1990 to 1995. Index i refers to utilities, and index t refers to time periods. </p>
<p>Ît is an error term representing two elements: statistical noise (vit) and inefficiency (ui): Îit = vit + ui). The decomposition of the error term into its two components may be done in several ways. The fixed effects approach assumes differences in the efficiency of different utilities are captured in their respective intercepts by the term (ai) in the above equation. That is, had all utilities used the same amount of each input, all differences in output levels would be represented in the intercept. </p>
<p>In estimating the efficiency level associated with each utility, the most efficient utility would be defined as the one with largest intercept. In other words, the most efficient utility represents 100-percent efficiency, and all other utilities are compared to it. </p>
<p>4The data, estimation results and summary statistical properties in SAS output format are available from the authors by request.</p>
<p></p>
<p><center>26</center>
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<p> <cfinclude template="../footer.cfm">
<p> 50-75% 5 86.8% </p>
<p> over 75% 5 81.3% </p>
<p> Utility with gas sales Yes 47 90.7% </p>
<p> No 47 90.3% </p>
<p> Percent Industrial 0-20% 22 89.1% </p>
<p> 20-40% 60 91.0% </p>
<p> over 40% 12 90.0% </p>
<p> Holding Company Yes 30 91.6% </p>
<p> No 64 90.0% </p>
<p> Hydro electric % of sales 0 39 90.0% </p>
<p> 0-10% 47 91.0% </p>
<p> over 10% 8 90.0% </p>
</p>
<p>1Several econometric techniques have been developed for obtaining the measurement of each component. The computational procedures, however, are complex and inexact. </p>
<p>2One study employing this technique was published in PUBLIC UTILITIES FORTNIGHTLY. (See, "The Efficient Utility: Labor, Capital, &amp; Profit," by D. Thomas Taylor and Russell G. Thompson, Sept. 1, 1995, p. 25.) That study used Data Envelopment Analysis, a mathematical programming technique, to estimate relative efficiencies of 13 investor-owned utilities. Some of that study's flaws and certain weaknesses of its methodology were later noted by Matthew Morey and L. Dean Hiebert. (See, "Measuring Utility Efficiency: A New Frontier" [letter to editor], PUBLIC UTILITIES FORTNIGHTLY, Jan. 1, 1996, p. 7.) </p>
<p>3The estimated equation was formulated as: </p>
<p>Ln(Yit) = Siai +SjbjLn(Xijt) + LFit + Îit where Ln(Yit) is the natural logarithm of total output in megawatt hours, Ln(Xijt) is natural logarithm of a set of j inputs (labor, capital, fuel and material), LF is the load factor, and T is a trend variable with values of 1 to 6 representing each year of data from 1990 to 1995. Index i refers to utilities, and index t refers to time periods. </p>
<p>Ît is an error term representing two elements: statistical noise (vit) and inefficiency (ui): Îit = vit + ui). The decomposition of the error term into its two components may be done in several ways. The fixed effects approach assumes differences in the efficiency of different utilities are captured in their respective intercepts by the term (ai) in the above equation. That is, had all utilities used the same amount of each input, all differences in output levels would be represented in the intercept. </p>
<p>In estimating the efficiency level associated with each utility, the most efficient utility would be defined as the one with largest intercept. In other words, the most efficient utility represents 100-percent efficiency, and all other utilities are compared to it. </p>
<p>4The data, estimation results and summary statistical properties in SAS output format are available from the authors by request.</p>
<p></p>
<p><center>26</center>
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Sun, 15 Jun 1997 04:00:00 +0000puradmin10211 at http://www.fortnightly.com